Texans Continue Paying Too Much for Electricity

Although some electric retailers have cut prices in recent weeks, Texas consumers continue paying too much for power, according to an analysis of federal data.

The Energy Information Administration, a federal agency that collects information about the electric industries in the 50 states and the District of Columbia, reports that average prices in Texas have remained consistently higher than average prices in adjacent Louisiana and Oklahoma. The agency also reports that prices have gone up in Texas over a recent 12-month period, while they have gone down in Louisiana and Oklahoma.

Like Texas, both Oklahoma and Louisiana rely on natural gas to fuel many of their generating plants. As the commodity price of natural gas has declined to a seven-year low in recent months, the average price of electricity also has declined. But the recent EIA numbers show that Texans continue paying too much:

*Average prices in Texas have gone UP during the last 12-month period for which the federal agency has collected data. For the 12-month period that ended in April 2009, Texas prices increased by more than 5 percent, according to the federal agency.

*By contrast, average prices have gone down in Louisiana and Oklahoma over that same 12-month period. In Louisiana average residential prices decreased by 11.63 percent. In Oklahoma they decreased by 2.1 percent.

*Texans, on average, pay nearly 50 percent more for electricity than residents in those two states, according to the most recent federal data. The agency lists the average residential price of electricity in Texas at 13.02 per kw/h, while it lists the average prices in Oklahoma and Louisiana at 8.82 and 8.73 respectively.

*The average price of electricity in Texas is also higher than the average nationwide price of 11.59 cents, according to the federal agency. For many years more before passage of the state’s electric deregulation law, Texans paid rates below the national average.

While the recent price cuts announced by some Texas retailers are not reflected in the most recent federal data, it”s logical to assume that the declines are no greater than those in regulated states with a similar dependence on natural gas. That”s because separate reviews of federal data have consistently shown that Texans typically pay more for electricity than customers in regulated states with a similar dependence on natural gas. Moreover, electric companies operating in a regulated environment are not permitted to earn any profit off the commodity price of natural gas.

R.A. "Jake" Dyer

Is a policy analyst for TCAP, a coalition of cities and other political subdivisions that purchase electricity in the deregulated market for their own governmental use. Because high energy costs can impact municipal budgets and the ability to fund essential services, TCAP, as part of its mission, actively promotes affordable energy policies. High energy prices also place a burden on local businesses and home consumers.

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